Selling a House to Pay for Long-Term Care

If you are the adult child of a parent that is moving to assisted living, developing a plan to pay the costs of long-term care is a top priority. You and your mother or father may be wondering whether or not selling your parent’s home makes the best sense to pay costs associated with assisted living. In this article, we provide a comprehensive examination of what you need to know about selling your parent’s home to pay for your mother or father’s assisted living expenses. This review includes:

  • Finding the right real estate agent
  • Staging the residence for sale
  • Tax consequences of selling your parent’s home to pay for assisted living
  • Dealing with the emotional aspect of selling the family home
  • Other assisted living payment options

Finding the Right Real Estate Agent

The National Association of Realtors offers some specific tips to assist you in finding the best real estate agent to sell your aging parent’s residence in anticipation of a move to assisted living. These tactics include:

Select an Agent With a Good Many Listings

When considering a real estate agent to sell your parent’s home, consider how many listing a particular agent has at this time. You want to select an agent that does have a decent amount of listings. Some go so far as to say you should select the agent with the most listings in a particular community. 

Select an Agent With a Background in Working With Older Women and Men

Another factor to consider when selecting a real estate agent to sell your parent’s residence is to select a real estate professional who has worked with elderly people in the past. A person with experience in working with older people will have the skillset necessary to better assist your parent in working through the home sale process.

Get Referrals From Family and Friends

Referrals from family and friends can be very helpful in finding the best agent to represent your mother or father in the sale of a home prior to moving into assisted living. 

Discuss Prospective Agents With Your Parent

You definitely will want to discuss agent prospects with your parent. You need to make sure your parent is included in the decision making process when it comes to the selection of a real estate agent to sell his or her home.

Get References From Prospective Agents

Finally, in selecting the best real estate agent to represent your parent in the sale of his or her home is to get references from prospective agents themselves. Of particular interest will be older individuals who have been represented by a particular agent in the sales of their homes. 

Staging the Residence for Sale

There are some key facts and factors that you need to keep in mind when it comes to the importance of staging your parent’s home for sale:

  • 86 percent of home buyers can better visualize their future resident when the property is properly staged.
  • Virtually every real estate agent confirms that staging the home has a positive impact on a prospective buyer’s view of the house.
  • It is estimated that buyers are 40 percent more likely to view a home that was staged online.
  • Staged homes sell for on average for a remarkable 25 percent more than homes in which no staging is undertaken.
  • Homeowners usually see a 5 percent to 15 percent return on investment when their homes are staged before putting the property on the market.
  • Staging your home can make you sell your home between 6 percent and 10 percent more quickly.
  • The living room is the most important room to stage when preparing a home for sale.
  • The master bedroom is the second most important room to stage, followed by the kitchen.
  • The home office and guest bedrooms are the least important rooms to stage.
  • Photos for visual staging cost between $40 and $195 per image.
  • The average cost of professionally staging your home costs between $1,000 and $5,000.
  • Virtual staging can reduce the cost of professional staging by upwards of 97 percent.

Do keep in mind that staging may be a somewhat foreign concept to an aging parent. Odds are that your parent has owned his or her current residence for an extended period of time. The reality is that staging very well may not have been widely utilized at the time your parent last bought or sold or bought and sold a residence. 

An immediate response of your parent could be offense to the idea that his or her home would benefit from staging. For this information, you need to provide your mom or dad with as much reliable information as possible on what staging is and how the property can benefit from staging.

Tax Consequences of Selling Your Parent’s Home to Pay For Assisted Living

Consideration must be made to the tax consequences associated with selling your parent’s residence to pay for assisted living costs. The reality is that the tax consequences associated with selling a home to pay for assisted living may not be as monumental as you might imagine.

If your parent has lived in the residence in question for at least two of the past five years, $250,000 in profit from the sale will be excluded from taxes. Therefore, depending on the value of the residence, there may be very little to no money derived from the sale subject to taxes. 

In addition, amount of money paid to purchase the residence in the first instance also comes into play. By that it is meant, that amount of money derived from the sale is also not included in the tax calculation.

Prior to putting your parent’s home on the market for sale, you are well-advised to consult with a tax accountant or tax attorney to be certain to get a full understanding of the potential tax liability. 

Dealing With the Emotional Aspect of Selling the Family Home

A growing body of research has concluded that there is a close and strong link between memory and a particular space, according to Scott Huettel, chair of the Department of Psychology and Neuroscience at Duke University. This particularly is the case when it comes to a space like a residence. The memories derived from a person’s home can be significant and extensive. 

Physical space can be tied to memory, and that space where memories have been made can carry more value than any monetary figure, Scott Huettel says. As a consequence of the tie between memory and a residence, the sale of a home can prove to be complicated and difficult for a parent.  

Other Assisted Living Payment Options

If for some reason the market isn’t the best to put your parent’s home for sale at this time, you may want to consider some of the other assisted living payment options. Ultimately, the market may reach a juncture at which a sale will make more financial sense. For the time being, accessing another source for assisted living payments may be the best course at this time.

Other assisted living payment options include:

  • Using money reserved in savings accounts or other investments
  • Medicaid might be able to provide some financial support for the payment of assisted living costs
  • Certain veteran’s benefits might also be available to aid in paying for assisted living
  • Money provided in part from other family members to aid in providing the funds necessary for assisted living

In the end, making sure the funds are in place to pay the costs for assisted living is the primary concern when the time comes for a parent is positioned to make this transition. This component of preparing to move to assisted living must be candidly undertaken to ensure there are no misconceptions in regard to paying for this type of long-term care.